The government on Monday initiated action for removal of Allahabad Bank CEO Usha Ananthasubramanian following the CBI chargesheet in the $2 billion PNB fraud detailing her role. Photo: Mint

Kolkata: State-owned Allahabad Bank on Monday said the Reserve Bank of India (RBI) has asked it to freeze lending after its capital-to-risk weighted assets ratio (CRAR) fell below the mandatory 9% at the end of March.

In a regulatory filing, the bank said the central bank had asked it “to restrict expansion of RWA (risk-weighted assets); to reduce exposure to unrated and high-risk advances; to restrict creation of non-banking assets; (and) to restrict accessing/renewing wholesale/costly deposits”.

The Kolkata-based bank said its board meeting on 11 May took note of the restrictions.

On Monday, the lender’s shares fell 3.18% to Rs44.20 on BSE in a flat market.

A spokesperson for Allahabad Bank said the management was immediately unable to comment on the development beyond what has been said in the stock market filing.

Under Indian banking laws, lenders are required to maintain a minimum CRAR of 9%, but at Allahabad Bank, it fell to 8.69% at the end of the March quarter from 11.45% at the beginning of the financial year.

Amid deteriorating asset quality, the bank reported a loss of Rs3,509.63 crore for the March quarter, compared to a net profit of Rs111.16 crore in the same period in the previous year.

For the full fiscal year, the bank registered a net loss of Rs4,674.37 crore as compared to a loss of Rs313.51 crore in the previous fiscal year, on the back of higher provisioning towards non-performing assets (NPA).

At the end of March, the bank’s gross NPA was at Rs26,562.79 crore or 15.96% of total advances, as compared to Rs20,687.83 crore or 13.09% at the beginning of the year.

In January, the RBI put the lender under the so-called prompt corrective action (PCA) after an on-site inspection of its bank’s books for the year till March 2017 revealed high level of stressed assets and negative return on assets for two consecutive years.

On Friday, Dena Bank, another public sector lender under PCA, said in a regulatory filing that the RBI had restricted the bank from “assuming fresh credit exposure and recruitment of staff”.

In a separate statement issued on Monday, Allahabad Bank said its board will be meeting on Tuesday to discuss the removal of its chief executive officer and managing director Usha Ananthasubramanian, although it had not received any “formal communication” yet to divest her off all powers.